Frontier Car Group, a used car marketplace company out of Berlin, recently finished a fruitful funding round from OLX.
OLX, the online classifieds group, announced that it will be investing around $400 million into Frontier through a mixture of shares and equity. This investment will include an upfront capital injection and OLX values Frontier at around $700 million.
Frontier already operates in several markets including Mexico, Chile, Nigeria, Pakistan, Indonesia, and the United States. The group also operates in Indian and Poland where OLX also have operations in.
Before OLX's announcement, the company had already confirmed that its capital injection would make OLX one of the biggest shareholder in Frontier, but not the majority shareholder.
Frontier Car Group currently provides consumers several services including inventory listings, inspection reports, financial services, pricing reports, insurance, and warranties. With the new investment, Frontier plans to grow and expand their current services especially within the used car market, grow into resale services via OLX, and add more CarFax or Blue Book pricing guides into their current offerings.
In the past year, Frontier reports it has sold around $700 million in vehicles.
In May of 2018, Frontier had raised $58 million, sold around 50,000 vehicles, and was expected to make around $200 million in yearly revenue.
Sujay Tyle, CEO and Co-Founder of Frontier, spoke on the company's intense growth:
"FCG has nearly tripled performance across every key metric since the first OLX Group investment less than 18 months ago and has expanded to four new countries in that time. This is a testament to FCG’s team, the ripe market opportunity, and the results of early integration with OLX in our key markets. Together with OLX and Prosus, we are aiming to revolutionize the used car market in several emerging and developed economies by adding trust, transparency and a comprehensive suite of services to all participants in the ecosystem."
"Together with FCG, we are aiming to build the leading global used car marketplace, offering a premium and convenient service to millions of car buyers, sellers and dealers," said Martin Scheepbouwer, CEO of OLX Group. "We're in a unique position to accelerate the expansion of this platform worldwide. Our experience in India is a great proof of concept, where within the space of a year, our joint venture has already increased the number of stores threefold, with car purchase volumes continuing to grow by 10% month-on-month.”
This is OLX's second investment into Frontier. In May of 2018, Naspers, OLX's parent company, put $89 million into the group which followed Frontier's $58 million funding round.
This latest investment follows an existing trend of consolidation around online retail businesses.
By investing in peer-to-peer used car sales, OLX could potentially be allowing Frontier to take advantage of emerging markets. OLX believes that along with Frontier the companies will be able to expand further into Asia, Latin America, and Poland.